Retail sales figures for the holiday season are in, and the dismal forecasts of the big media, both broadcast and print, have been largely borne out. According to Spending Pulse, a division of Master Card, retail sales fell somewhere between 5.5 and 8%. The lack of consumer confidence indicated by these figures is in itself one of the most powerful forces deepening the recession and slowing the overall economy.
Yet hidden deeper in the story are figures that do not jibe with the overall picture. The drop in energy prices most visible at the gas pump, has made a huge difference in the actual spendable income of consumers. For instance, excluding auto and gas, which are, of course, way down, the drop in spending is only 2-4% for the same period. Adjusting for inflation, (which takes into account the drop in energy prices), disposable income for November was up 1%, and overall spending was actually up .6%.
These numbers being what they are, why then, was consumer spending for the holiday season off so far, helping to lengthen and deepen a recession? The simple answer is that the constant harping of the mainstream media on economic gloom, doom, and catastrophe has scared the bejesus out the average shopper and caused him to overlook, in his panic, the fact that his wallet is a bit fatter than last year. In a nutshell, the cratering of gas and energy prices have more than made up for the increase in unemployment.
Sadly, this did not have any benign effect on holiday spending, once again, because of the excessively pessimistic economic coverage by, in particular, huge urban daily newspapers whose chief source of income is retail advertising. (The TV networks were almost as guilty.) Now, in 2009, many of the retailers who invested their advertising dollars in these media will go broke. And in condign retribution, a lot of the media giants may well go down with them. The Chicago Tribune, which also owns the LA TImes, has filed bankruptcy, and the demise of the New York Times conglomerate is being openly contemplated by its management. Meanwhile, the Pulitzer chain is virtually worthless.
In the meantime, the Winona Post prepares for a prosperous 2009 in a healthy, if not booming, trade area, and urges our readers to spend, spend, spend! Happy New Year!